Research Credit

California Tax Form 3523: Research Credit

Use the California Tax Form Calculator California Tax Form 3523: Research Credit as a stand alone tax form calculator to quickly calculate specific amounts for your 2019 California state tax return. California Tax Form 3523: Research Credit is also integrated into our comprehensive California State Tax Calculator where you can complete and save your calculations for later use. Alternatively you can use one of our Combined Federal and California State Tax Estimator to quickly calculate your salary, tax and take home pay in California.

Research Credit

Part I Credit Computation. Read the instructions before completing this form.

Section A Regular Credit. Skip this section and go to Section B, Alternative Incremental Credit, if you are electing the alternative incremental credit

Line 1 through line 4 are to be completed only by corporations (other than S corporations, personal holding companies, and service organizations).Individuals, S corporations, estates, trusts, partnerships, and limited liability companies (LLCs), begin on line 5.

1

Basic research payments paid or incurred during the taxable year. See instructions

1

2

Base period amount. See instructions

2

3

Subtract line 2 from line 1. If less than zero, enter -0-

3

4

Multiply line 3 by 24% (0.24)

4

Qualified research expenses paid or incurred.

5

Wages for qualified services. See instructions

5

6

Cost of supplies. See instructions

6

7

Rental or lease costs of computers. See instructions

7

8

Enter the applicable percentage of contract research expenses. See instructions

8

9

Total qualified research expenses. Add line 5 through line 8

9

10

Enter fixed-base percentage, but not more than 16% (0.16). See instructions

10

11

Enter average annual gross receipts. See instructions

11

12

Base amount. Multiply line 11 by the percentage on line 10

12

13

Subtract line 12 from line 9. If zero or less, enter -0-

13

14

Multiply line 9 by 50% (0.5). See instructions

14

15

Enter the smaller of line 13 or line 14

15

16

Multiply line 15 by 15% (0.15)

16

17a

Regular credit. Add line 4 and line 16. If you do not elect the reduced credit under IRC Section 280C(c), enter the result here, and see instructions for the schedule to attach

17a

17b

Reduced regular credit under IRC Section 280C(c). Multiply line 17a by the applicable percentage below:• 87.7% (0.877) for individuals, estates, and trusts• 91.16% (0.9116) for corporations• 98.5% (0.985) for S corporationsEnter the reduced credit amount and write “Section 280C(c)’’ on the dotted line to the left of line 17b

17b

Line 18 through line 21 are to be completed only by corporations (other than S corporations, personal holding companies, and service organizations). Individuals, S corporations, estates, trusts, partnerships, and LLCs, begin on line 22.

18

Basic research payments paid or incurred during the taxable year. See instructions

18

19

Base period amount. See instructions

19

20

Subtract line 19 from line 18. If less than zero, enter -0-

20

21

Multiply line 20 by 24% (0.24)

21

Qualified research expenses paid or incurred.

22

Wages for qualified services. See instructions

22

23

Cost of supplies. See instructions

23

24

Rental or lease costs of computers. See instructions

24

25

Enter the applicable percentage of contract research expenses. See instructions

25

26

Total qualified research expenses. Add line 22 through line 25

26

27

Enter average annual gross receipts. See instructions

27

28

Multiply line 27 by 1% (0.01)

28

29

Subtract line 28 from line 26. If zero or less, enter -0-

29

30

Multiply line 27 by 1.5% (0.015)

30

31

Subtract line 30 from line 26. If zero or less, enter -0-

31

32

Subtract line 31 from line 29. If zero or less, enter -0-

32

33

Multiply line 27 by 2% (0.02)

33

34

Subtract line 33 from line 26. If zero or less, enter -0-

34

35

Subtract line 34 from line 31. If zero or less, enter -0-

35

36

Multiply line 32 by 1.49% (0.0149)

36

37

Multiply line 35 by 1.98% (0.0198)

37

38

Multiply line 34 by 2.48% (0.0248)

38

39a

Alternative incremental credit. Add line 21, line 36, line 37, and line 38. If you do not elect the reduced credit under IRC Section 280C(c), enter the result here, and see instructions for the schedule that must be attached

39a

39b

Reduced alternative incremental credit under IRC Section 280C(c). Multiply line 39a by the applicable percentage below:• 87.7% (0.877) for individuals, estates, and trusts• 91.16% (0.9116) for corporations• 98.5% (0.985) for S corporationsEnter the reduced credit amount and write “Section 280C(c)’’ on the dotted line to the left of line 39b

39b

Section C Available Research Credit

40

Pass-through research credit(s) from S corporations, estates, trusts, partnerships, and LLCs. See instructions

40

41

Current year research credit. If you did not elect the reduced credit under IRC Section 280C(c), add line 17a or line 39a to line 40 and enter the result here. If you elected the reduced credit under IRC Section 280C(c), add line 17b or line 39b to line 40 and enter the result here

41

42

Enter the amount of credit on line 41 that is from passive activities. If none of the amount on line 41 is from passive activities, enter -0-

42

43

Subtract line 42 from line 41

43

44

Enter the allowable credit from passive activities. See instructions

44

45

Non-passive activity credit carryover from prior year. (Do not include credits received through assignment) See instructions

45

46

Total Add line 43 through line 45

46

Part II Carryover Computation. Combined Report Filers see instructions for Part III before completing this part.

47

Credit claimed. Enter the amount of the credit claimed on the current year tax return. See instructions. (Do not include any assigned credit claimed on form FTB 3544A.)

47

48

Total credit assigned. Enter the total amount from form FTB 3544, column (g). If you are not a corporation, enter -0-. See instructions

48

49

Credit carryover available for use or assignment for future years. Subtract lines 47 and 48 from line 46

49

Part III Credit Allocation and Carryover Per Entity – Only Combined Report Filers

To make an election for assigning credits, you must also complete form FTB 3544. Otherwise, the assignment indicated here will be invalid.

Tip: use the California Tax Calculator to edit your refundable and non-refundable tax credits including California Tax Form 3523: Research Credit. Complete, Calculate, print and or save your tax calculation for later use.